GDP is not a good indicator of economic health; We are heading to a CRASH.

quote:
GDP = C + G + I + NX

where:

“C” is equal to all private consumption, or consumer spending, in a nation’s economy
“G” is the sum of government spending
“I” is the sum of all the country’s businesses spending on capital
“NX” is the nation’s total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)
=====================

In short, everything can be flat, or slightly negative or positive and massive government spending make GDP look good. The last time I read an article on government spending (last year) it was 61% of national income. (It was 20% around the time of WW II)

GDP is not a good indicator of economic health and many analysts don’t really consider it as a meaningful indicator. Take the last 8 years under Bush. The Clinton recession (signs it was beginning, according to the agency that determines recessions, were seen as early as Oct. in Clinton’s last year) began the 1st or 2nd month of Bush’s term. It was caused by the cuts in spending under Clinton but, the important thing is how GDP is adjusted.

Each quarter, we got a GDP report from Bush’s administration. Most were positive. Yet, when adjusted for real CPI, not one full year of positive GDP was found. Only by using under reported CPI to adjust GDP were we able to get positive numbers during the housing and debt bubble.

Even now, real inflation is about 8% when calculated the same way we did before we started things like “substitution” and “hedonic adjustments.” You can always get the current CPI calculated the way we use to calculate it from Shadow Stats, and you can get the real GDP number adjusted with real CPI

http://www.shadowstats.com/alternate_data
(today’s numbers not in their graphs yet)

The GDP number is still good for some investors who are aware of what is going on, preparing for the other side of the storm (whether in months or a couple years) and using the “bullish” mood to make money with. But, it isn’t good for those looking for a job and who can’t find one. It isn’t good for those losing their homes or seeing equity disappear in this next leg down in housing. It isn’t good for the cities and states having to cut police, fire and other services employment and spending nor for the private sector that sell to government.

With analysts saying it will probably be a decade before we get down to 8% unemployment, this is going to be a tough decade in many ways for millions of people, thousands of business and the budgets of most major metropolitan areas.

Finally, we have to borrow to keep this up. Currently we are at $6 of borrowing for each $1 of GDP growth and our Government Accountants (GAO) say this is unsustainable, yet, cutting spending puts us in a depression now, instead of later.

This is how everything is being propped up from the Fiscal and Monetary side of US Gov’t., a total of $4.7 Trillion dollars (courtesy of CNN Money).

http://money.cnn.com/news/specials/storysupplement/stimulus-tracker/index.html

Yes, that means we are in a Deflationary / Debt Collapse. See Bill Gross’s (PIMCO) article from “Seeking Alpha”:

http://www.businessinsider.com/henry-blodget-bill-gross-assets-are-15-trillion-overvalued-and-fed-will-keep-rates-at-0-forever-to-keep-the-fantasy-alive-2009-10

- JanPaul

Related Posts:

• Government needs to fill up the gap for consumer spending to delay the collapse
• What are people going to consume with?
• Bernanke believes inflation is the solution for the depression.
• The great depression and this crisis have to be viewed from the perspective of the run up to the crisis.
• U.S: Borrowing $1 doesn’t add to $1 of GDP growth

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